S&GS Notes: If you haven't noticed, that's fine… but we've had a 2 week break from the Newsletter while out of town on the West Coast. Back in the office again now, and wanting to keep you informed on what's going on in the market… You may have noticed that both Silver & Gold have broken through their historic ceilings/resistance points in the last 2 weeks. Gold briefly broke through the $1300 mark today before landing just under that resistance point. Silver broke through the $21 30-year high earlier this week, and has been pushing higher to breaking the next resistance point of $21.50. We may see a correction, but everyone predicts it will be brief and the upward trend will continue.

Undervalued Silver In A Government Spending Frenzy

Mogambo Guru
September 25, 2010

With the U.S. government having already stolen the gold of its own citizens once, a question which I have often been asked by American readers is "do I think the U.S. government will steal [their] gold again?" My reply has always been that in the absence of a gold standard there is no motive for simply confiscating all gold again.

With U.S. debts and liabilities exceeding $10To prove that all my yelling, "Buy silver now, or you're a moron!" has paid off, silver is getting a lot more press coverage lately, like the headline "Silver Hits '80 Level; Gold Sets Fresh High," which appeared on the front page of The Wall Street Journal's "Money and Investing" section.

The reason that gold at $1,271 was hitting new record-highs, but not silver, is that silver, at $20.74 per ounce, is only at the highest price since October 1980, which is almost exactly 30 years ago.

Suddenly, I feel myself wanting to launch into some hyperventilating, rabid recommendation to buy silver, waxing overly-enthusiastic about silver as some "bargain investment of the century" because of any of a dozen reasons right off the top of my head, and probably many, many more if I were smart enough to understand their significance, which I can only barely sense, even though people are screaming at me, "What is it that you don't understand, you moron? We're been over this a dozen times!"

All I know for sure is that silver is actually not anywhere near its record high, as it now sells for a piddly $20.74 per ounce, less than half as high as silver's all-time record price of $48.70 per ounce, which occurred in January 1980 during the infamous episode where the Hunt brothers tried, and almost succeeded, to corner the silver market, which brought out the slimy and infamous insider and government response to counter their ploy and crush the Hunt brothers.

This is not, however, a discussion about how the government is a far greater bunch of scumbags than the Hunt brothers at their worst, and don't get me started on the slimy goings-on in the commodity exchanges, or how the Hunts were destroyed because, I assume, out of envy that they were so rich and so megalomaniacal that they enjoyed shameless orgiastic bacchanalia and other disgraceful perversions of the kind and expense that the government workers have to content themselves to, nowadays, merely view on their computers all day.

Of course, critical people want to know why I even bring up the topic of pornography in the first place, and why dog-eared copies of "Leggy, Lusty and Luscious" magazines are all over my office, when none of it has any relevance to anything, other than my idly musing that if I were rich enough to try and corner the silver market, I know what I would do, you know what I mean?

And anyway, there are enough accumulated news reports of government workers being caught-out watching porn while at work to indicate that the practice is pandemic, which doesn't explain how the average government worker makes twice as much in wages and benefits as the average private-sector worker, nor does it explain how I can get one of those terrific government jobs making a lot of money to watch dirty movies all day, which are not (in case you were wondering) listed on any job listings I've seen, although, believe me, I looked!

But they do make this kind of money, and since the odious Supreme Court said that they could unionize so as to channel gobs of election-money to the very politicians who authorize their salary and benefit packages, I assume it will continue as part of Obama's deficit-spending massive, massive, humongous amounts of money to maintain ALL government spending. And more, to offset the inflation caused by the previous deficit-spending!

Oddly enough, as sadly suicidal as this is to the country, it should make you, a Junior Mogambo Ranger (JMR), giddy with delight, as all this new money means that inflation in prices will soar, which is the stuff of euphoria for those buying gold, silver and oil stocks today at such bargain levels, so that we will attain the state of Nirvana known as "Rich, Rich, Rich (RRR)" when their prices soar as the Federal Reserve continues to destroy the buying power of the dollar!

And with the government and the Federal Reserve working overtime to make it happen just like that, what can you say but, "Whee! This investing stuff is easy!"?

My Trading Post (.org) has been created to facilitate trade between owners of precious metals who wish to barter for goods / services, and sellers who wish to trade their goods and services for precious metals.

MTP is a FREE barter classified service, newly launched this Labor Day weekend. So spread the word to your networks… and help build this resource for the benefit of everyone. Please drop in and place an ad.

Cook: I want to limit this interview to a discussion of why someone would switch gold into silver. You advocate that right?

Butler: Yes.

Cook: What's the main reason?

Butler: Because those who switch will make a lot more money than those who don't switch.

Cook: Don't you think gold will go higher in price?

Butler: I think it will, but silver is poised to go much higher relative to gold.

Cook: Most people believe gold has done better than silver up until now. What do you say to that?

Butler: An objective analysis would suggest otherwise.

Cook: Give us the objective analysis.

Butler: If you bought gold at the extreme lows of $250 or silver at $4, your returns would be roughly equal.

Cook: People have an emotional attachment to their gold. It's hard to part with. What do you say to them?

Butler: That emotional attachment could cost people a lot of money.

Cook: What do you mean?

Butler: I believe that the emotional attachment is to the idea of gold, not to gold itself. People want an asset that is immune from the conventional financial system and government control. Gold has traditionally been that asset. I understand and accept that. However, due to changes in the world over the past 100 years, silver has become better than gold.

Cook: Better than gold?

Butler: Yes, better. I believe silver is the new gold.

Cook: What could make you say that?

Butler: The fact that we have used up so much silver over the past 50 years. Now silver is rarer than gold in world bullion inventories. Only a handful of investors realize that.

Cook: What is the status of gold and silver inventories?
Butler: World silver inventories are at their lowest point in 200 years while gold inventories are at their highest.

Cook: Do you know how much egg you will have on your face if gold goes up and silver doesn't?

Butler: I don't worry about that. Do I have egg on my face for informing the world that silver was manipulated, or rarer than gold, or that JPMorgan was the big silver short?

Cook: Frankly, I own some gold and I don't think I have it in me to make the switch.

Butler: In all due respect, your emotional attachment is showing. I don't deny that's a powerful force, just that investment analysis is different. I'm not suggesting people sell their gold and call it a day. I'm suggesting a conversion of gold into silver. This way, you keep the emotional attachment and greatly boost your investment returns.

Announcing New Launch!

My Trading Post (.org) has been created to facilitate trade between owners of precious metals who wish to barter for goods / services, and sellers who wish to trade their goods and services for precious metals.

MTP is a FREE barter classified service, newly launched this Labor Day weekend. So spread the word to your networks… and help build this resource for the benefit of everyone. Please drop in and place an ad.

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Labor Day!

Cook: I think it's a good time to switch rare coins into silver. What do you say to that?

Butler: I think it's a good time to switch anything possible into silver, including rare coins.

Cook: If a person only owns gold and no silver what about shifting a percentage of it into silver?

Butler: It's important to get as much silver as you can.

Cook: Can you give us an illustration by using the prices we could see in the future?

Butler: Sure. Let's say silver goes up 300% to $50 an ounce. To equal that gold would have to go to $3,600. With silver at $100 an ounce, gold would need to be $7,200.

Cook: You think it's more likely that silver will reach those levels?

Butler: More likely? I can't see how silver won't reach those levels in almost every possible future scenario. On the other hand, it will have to be a very ugly world for gold to hit those numbers.

Cook: What about the gold to silver ratio?

Butler: For hundreds of years it was 16 to 1. Gold was priced 16 times higher than silver, now gold is 64 times higher.

Cook: How much gold and silver does our government hold?

Butler: They ran out of silver. The U.S. Mint has to buy millions of ounces of silver every year for its coin programs. U.S. gold inventories are in the billions. It means the government can't manipulate the silver price. They don't have any to sell.

Cook: You've called silver "the single greatest profit opportunity of our time." Are you sticking with that?

Butler: Absolutely. I believe they will be writing about the coming price events in silver for centuries. If you don't have silver but you own gold a switch makes a lot of sense to me.

Cook: What about selling half your gold to buy silver?

Butler: Fine. Whatever you have to do to get silver get it done. I believe the time is growing short before the things I have written about begin to unfold.

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